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Summary
- Non-essential businesses such as restaurants and retail segments suffered amid the pandemic-triggered lockdown.
- Shares of restaurant chains like MTY Food Group (TSX:MTY) and Restaurant Brands International (TSX:QSR) plunged during the pandemic-led market crash in March.
- Winter-wear clothing maker Canada Goose (TSX:GOOS) saw its second quarter revenue fall to C$ 26.1 million.
- Business of these companies have now picked up, leading to a rise in their share values.
The COVID-19 outbreak forced people to limit their spending to necessities. The lockdown that followed on its heels further tightened this spending, leading to a drop in sales for non-essential businesses like restaurants and apparel manufacturers. This struck a massive blow to companies like Canada Goose (TSX:GOOS), Restaurant Brands International Inc (TSX:QSR) and MTY Food Group Inc (TSX:MTY). As a result, their stocks plummeted during the market crash. However, their popularity among Canadian investors does not seem to be lost, as these consumer stocks continue to be traded heavily at the stock market. Let us take a closer look at these companies to understand their demand among investors.
Canada Goose Holdings Inc (TSX:GOOS)
Current Stock Price: C$ 36.52
As the demand for luxury products like parkas and winter-wear fell amid the pandemic, Canada Goose’s business felt the heat. Its stocks tumbled during the pandemic-led market crash, falling as low as C$ 20.77 on March 17, and hasn’t yet recovered to its pre-pandemic levels. Despite this, Canada Goose shares are witnessing heavy trade activities on the Toronto Stock Exchange. Its scrips registered a growth of nearly 47 per cent in the last six months and are currently among the market outperformers.
In its latest quarter ending 28 June 2020, Canada Goose saw a total revenue of C$ 26.1 million, down from C$ 71.1 million in Q1 (ending 30 June 2019). It suffered a net loss of US$ 50.1 million and an operating loss of C$ 59.3 million, while its gross profit plunged to C$ 4.8 million.
Canada Goose continues to be in demand among investors in spite of recent the financial performance. The likely driving factors behind this could be its strong brand reputation and past performance on the stock market. This Toronto-based clothing company has a rich history of being on the backs of first Canadian Mt Everest summiteer Laurie Skreslet, Iditarod racer Lance Mackey and McMurdo Station scientists in Antartica. As for its stocks, Canada Goose shares had soared over 300 per cent between its TSX debut on 19 March 2017 and 18 November 2018. In the last three years, its shares have seen a growth of nearly 51 per cent.
Currently, Canada Goose has a price-to-book (P/B) ratio of 8.47 and a price-to-cash flow (P/CF) ration of 21.50. In the last 10 days, it has seen an average share trading of 311,473.
Restaurant Brands International Inc (TSX:QSR)
Current Stock Price: C$ 75.69
When the coronavirus pandemic hit in March, one of the first businesses forced to go under lockdown was restaurants. Restaurant Brands International Inc saw its stock price plunge during the market crash, dropping as low as C$ 40.64 on March 19. But over the next few months, the company adapted to the changing times and expanded its existing business on digital platforms. The rising popularity of e-commerce mediums and homebody economy amid the pandemic helped Restaurant Brands International recover some of its gains. Though it hasn’t rebounded to its pre-pandemic levels yet, the share price of this company climbed nearly 18 per cent in the last six months.
Restaurant Brands International Inc owns fast food chains Tim Hortons, Popeyes and Burger King. In its second quarter ending 30 June 2020, the company saw a system-wide sales growth of nearly 21 per cent. But the impact of the pandemic reflected in its total revenue, which fell from US$ 1.4 billion in Q2 2019 to a little over US$ 1 billion in Q2 2020. Its diluted earnings per share (EPS) also dropped to US$ 0.35 in the second quarter of 2020. Restaurant Brands International’s net debt at the end of the quarter stood at US$ 11.3 billion. It currently pays a quarterly dividend of US$ 0.52 and the present dividend yield is 3.60 per cent.
Digital sales of the C$ 23.2 billion-market cap company grew over 120 per cent year-over-year, as reflected in its Q2 report. By August, 93 per cent of its restaurants worldwide had also reopened post-lockdown.
MTY Food Group Inc (TSX:MTY)
Current Stock Price: C$ 38.42
Casual dining franchisor MTY Food Group Inc suffered heavily in the wake of the pandemic. As restaurants were forced to close down public dining services, MTY Food Group’s stock price crashed. On March 19, the share value fell to C$ 16.58, its lowest point in last five years. While it isn’t close to its pre-pandemic levels, MTY scrips have been crawling back up since. In the last six months, it has gained nearly 6 per cent.
MTY Food Group’s second financial quarter ending 31 May 2020 recorded system sales of C$ 670.7 million, down 19 per cent YoY. Its EBITDA was C$ 18.2 million, a 47 per cent decrease YoY, and cash on hand was close to C$ 50 million in Q2 2020. The company also saw a non-cash impairment charge of C$ 120.3 million and net loss was over C$ 99 million in the second quarter.
The Montreal-based company had to temporarily close down 2,757 locations in the second quarter, which severely impacted its sales. Despite all this, MTY Food Group stocks remained popular among Canadian investors. Its share price has steadily climbed by over 37 per cent in the last three months, and almost 15 per cent in the last month. As the lockdown restraints are eased in phases, MTY Food Group said its focus will lie in reopening its business outlets over the next few quarters.
